Federal student loan payments resume after three-year hiatus
Many borrowers are scrambling to find ways to pay
KNOXVILLE, Tenn. (WVLT) - After a three-year pause due to the pandemic, student loan payments will resume on Oct. 1. That leaves just a few weeks for borrowers to prepare to make their first payment.
Now is the time to figure out what repayment plan makes the most sense for your individual situation.
There are still several options for those who may be struggling, including income-driven repayment (IDR) plans. The U.S. Department of Education is promoting the Saving on a Valuable Education (SAVE) plan, an IDR plan that replaced the existing Revised Pay-As-You-Earn (REPAYE) plan. The SAVE plan has the lowest monthly payment of all IDRs and is calculated based on your income and family size.
Below is a chart that shows how much individuals would be estimated to pay under the SAVE Plan.
Financial Coach at Covenant Financial, Jonathan Shipp said you cannot rely on a repayment plan alone when paying off student loans.
“So budgeting is going to be a really big key in moving forward with paying off your loans and getting out of debt there,” said Shipp. “You’re going to be able to tell every single dollar that you’ve earned to say ok you’re going here, you’re going there. So, you’re not overspending and you’re not wondering where your money went… if you can get a good written budget down it really does just kind of send your finances into overdrive.”
Shipp said he has seen clients who have not accounted for loan payments since they were paused.
All student borrowers are eligible for SAVE and more than 90,000 Tennesseeans are already enrolled.
More details on SAVE and other student loan payment resources are available here.
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